The IC-DISC Show

David Spray

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Join host David Spray, as he interviews business owners and industry leaders about the IC-DISC program. Insights and anecdotes to help you increase your after-tax income.

APR 27

Ep073: From One-Room to 40,000 Pounds a Day

Today on the IC-DISC Show we're talking with John, Clive, and Kelly Hess from CompuCycle in Houston. John started in the metals business in South Africa back in 1966, came to the US in 1986 to run a brass and copper distribution company, and spun off a small scrap division that eventually became CompuCycle. Clive joined in 1996 fresh out of U of H. Kelly came aboard in 2013 from the nonprofit world and now runs the company as CEO. Three decades later they're processing 40,000 pounds a day and hold more certifications than any other electronics recycler in Texas. In this conversation, the Hess family talks about the moment the Basel Accord shut down their entire plastics market overnight, why they think scrap metal companies handling electronics is now a liability risk for corporate customers, and how they built their own plastic washing line to solve a problem the rest of the industry was still struggling with. Kelly also shares a partnership they've built with Pearland ISD that turns scrap dismantling into job training for autistic students ages 18 to 22. Whether you're in recycling or not, the Hess family's thinking on running a multigenerational business, earning certifications most competitors won't bother with, and treating customer problems as a moat instead of a cost is worth your time. SHOW HIGHLIGHTS How John Hess went from manufacturing copper ingot in South Africa in 1966 to building Houston's largest electronics recycler Why being R2 certified isn't enough, and what Compu-Cycle did after watching certified downstreams still send material to landfills The day the Basel Accord shut down their entire plastics market overnight, and how they engineered their way out Why scrap metal companies handling electronics has become a liability risk for their corporate customers The partnership with Pearland ISD that turns scrap dismantling into job training for autistic students What changed when Kelly came in from the nonprofit world and the family started hiring people smarter than themselves Contact Details LinkedIn - Gordon Driscoll LINKS Show Notes Be a Guest About IC-DISC Alliance About CompuCycle John HessAbout John Kelly HessAbout Kelly Clive HessAbout Clive TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Dave: Well good morning. So this is my first time. I've had three guests on the podcast at one time. We have John Hess, we have Kelly Hess, and we have Clive Hess. So where are you all, calling into from today? what part of the world are you all in? Where now? John: We, I'm a responder. We're in Houston, Texas. Dave: Okay. And so am I. So that's, that is good. what I wanna talk about, and the reason we're doing the three person interview is the company Compus Cycle has been in business a little over 30 years, is that right? Kelly: 30 years to this? 2026 is our 30th anniversary, so we're really excited. Dave: That is awesome. and so what I wanna do, I want to go to the far origin of comp cycle, which really starts with John. So what I'd like to do is just start off with a little background on John and his entrance and experience in the scrap metal industry. So John, where are you? What part of the world do you hail from? John: Originally South Africa and have been in the metal business all my life. started in, at the age of 23 in 1966. Go back a long way. Dave: Okay. And, and then you're in the metals business, Ferris, non Ferris, John: right? we, I was, we were ingot manufacturers. We manufactured copper and aluminum based ingot for the foundry industry. And, got into the. Computer business, way back in about 1975 when we imported a, a machine for stripping cables and Okay. This machine also had the capability of shredding,computers of the old mainframe computers. Of course, there were no PCs at that time. Yes, of course. So that was my introduction to computers. Dave: Okay. So you're,you're getting into the computer, so we're talking if I'm doing my math right, that was about 50 years ago that you're involved in the shredding, chopping cable, shredding mainframe computer components. Is that about right? John: That's about right. Yep. Dave: Okay. And then how did we get from there to Compu cycle? John: Well, in 19. In 1966, I was offered an opportunity to come to, sorry, I'm getting myself messed up. It was 1986 that I had an opportunity to come to the United States to manage a company that distributed bras and copper bars and rods. Dave: okay. John: And we, while whilst there, I started a scrap division and that scrap division eventually became Compus Cycle. Okay. Right. Dave: Okay. So did, so was Compus Cycle like a literal spinoff from that company or was, did the idea come to you while you were there and you started a completely separate company? John: Well, we started it as a spinoff of that original company and, after a few years of running that business, I decided to leave the parent business and, get comp cycle going on its own. comp cycle started in the 1990s, as, A computer processing facility. Dave: Okay. And what does the name mean? John: What, what would the, what does the name mean? Dave: Yeah, I'm guessing it, it's like computer recycling that they John: kinda, yeah, computer cycle. we were largely in the scrap processing business at that time, but occasionally found product that was resalable and. okay. We actually repaired that and resold it. and that is how comp cycle began its existence, and it become a whole lot more sophisticated, over the years. Dave: Okay. Now, when you launched it, were Clive and Kelly involved at that time? John: Clive became involved. Clive, I can't remember the year. When was it? Dave: Yeah. Clive: I was involved, Kelly in 1996, I believe I was involved. Yes. And Kelly became involved in 2013. Was it 2013? Kelly: It's in 14 years. Believe it or not. Clive: Yeah, Kelly: 14 years. Dave: yeah, Kelly couldn't have, obviously Kelly couldn't have been involved from the beginning because she would've been in elementary school 30 years ago. Kelly: Well, no, I was that when he said, John said 50 years. I was like, okay, well that's exactly my whole life livelihood. And then, but yeah, no, Clive, I think, funny enough, we were dating when you were involved in Compu Cycle, but It was great though because Clive graduated. Well, you tell your story. You graduated from U of H and then jumped in. Clive: Yeah, I graduated, got involved and, we were, as my dad mentioned, primarily doing electronic scrap. and it evolved. it was really interesting. Back then there were very few companies doing what we were doing. And so not really knowing how to do what we were doing, we could survive and, we, we were scrapping mostly for the metal and precious metal recovery. Okay. Dave: And Clive: evolved into harvesting components, reselling the components, and then the refurbishing of equipment. On a very basic level, reselling it. And,as mentioned today, we are far more sophisticated than what we used to be 30 or 25 years ago. so it, it's, it, it grew from a very small business into a, today we're, we are a very. nice mid-size company. In our industry, John: we like to think of ourselves as the most dominant computer processing facility in, certainly in Houston and probably in Texas. Dave: Okay, so Clive, when you joined. I'm guessing it was a cushy job. You're the boss's son. You probably just sat at a desk with your feet on the desk, smoking a cigar all day, I'm guessing. Is that, was that about right? Is that kind of how it worked out? Clive: I would love to agree. family businesses are very unique, Dave, and, it, it, I'm very blessed. I'm very grateful for what I have. but it, that, I wish that was the case. No, we were certainly, yeah. Very involved and very entrenched. And, and,it's been a, it's been wonderful working with my dad and, it's been. more wonderful working with my wife. Kelly: He's just trying to be nice. That's a whole other podcast, Dave. Dave: Sure. Yeah. And obviously, and oh, and obviously I was joking with you, Clive, because usually the story is that when you're the boss's son, it's hard. Your life is harder because you're held to a different standard. Sometimes your dad has to go the opposite way and be even harder on you than the other employees. Clive: Yeah, he was actually,I will say,very easy with me. and,but it's, it, I was working for John: him getting clever aboard. Definitely took us to a higher level than we were when I was here on my own. And getting Kelly aboard gave us, a further injection to the extent that we've over the last 13 years since Kelly's arrival com cycle has matured enormously, it's become from simply another scrap, another computer scrapping business. To a sophisticated computer, refurbishing and scrapping as well. our scrap division has grown enormously with the addition of a shredding plant for computers and more recently a shredding plan for plastics, which, makes us unique in terms of having abilities that others simply do not have. Dave: Okay. No, that I get that. What, so I'm a chronological thinker. I'm an accountant. And so what I'd like to do is let's go back 30 years. You touched on it, John. Let's think about like the big milestones. So it, the company started in 96, if I'm doing my math right, in 1996. And what year did you join Clive? Clive: in 96 I was Dave: Okay, so the same time. Clive: Yeah. Dave: So as you think back, what was like maybe the first significant milestone? If we're thinking like in five year kind of impli or increments, like any major things that happened in those first five years that were, meaningful to where we got to today? Clive: If, gosh, going back 30 years, I can't go back three years, but,it's, bringing on. Large accounts. I think the first large account that I recall bringing on, would be Texas Children's Hospital. Okay. And,when we, that was a significant accou

54 min
MAR 17

Ep072: Software as a Competitive Advantage with Gordon Driscoll

Today on the IC-DISC Show we're talking with Gordon Driscoll. Having spent his early career at Goldman Sachs investing tens of millions into metals companies, he kept noticing they were running their operations on Excel spreadsheets and software from the 1980s. That gap became Green Spark, a cloud-based platform now in over 900 scrap metal recycling locations. In this conversation, Gordon talks about what it took to break into an industry where relationships go back generations, why he thinks most business owners are thinking about software wrong, and how his team earned credibility by acting more like a partner than a vendor. He also shares a customer story that stuck with me about a scale operator who got his first lunch break in six years. Whether you're in scrap or not, Gordon's thinking on sustainable growth, earning the right to disrupt, and treating technology as a competitive advantage rather than a cost center is worth your time. SHOW HIGHLIGHTS Why a Goldman Sachs investment banker left finance to build software for scrap yards The massive technology gap Gordon kept seeing in companies handling tens of millions in materials How Green Spark grew to 900+ locations by acting like a partner, not just a vendor The customer story about a scale operator getting his first lunch break in six years Why Gordon believes you have to earn the right to disrupt an industry, and what that looks like in practice The mindset shift from treating software as a cost center to using it as a competitive advantage Contact Details LinkedIn - Gordon Driscoll LINKS Show Notes Be a Guest About IC-DISC Alliance About Green Spark Software Gordon DriscollAbout Gordon TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Gordon: And I think that a lot of folks, candidly, just because they're not used to either our model or what technology can do today, they don't realize, which is changing, they still view software as a cost center. And ultimately the tools that we're seeing and the applications that we are pushing to the industry, a lot of our customers view as a competitive advantage. Dave: Good morning, Gordon. So where are you calling in from today? Gordon: Hey, Dave. Appreciate you having me on. I'm in Brooklyn, New York today. Dave: Oh, okay. That is great. So I must say, I know a lot of folks in the scrap metal industry, service providers, yard operators, brokers, but you seem to have a particularly unique background. So why don't you tell the story from the time you graduated college? Sounds like you spent some time in investment banking in New York. And what caused you to have this epiphany that you wanted to go provide software in the scrap metal industry? Gordon: Yeah, no, of course. It's worth an explanation because looking at my background on paper from finance to scrap software, it doesn't make much sense. So yeah, started my career in financial services, spent a few years in investment banking at Goldman Sachs and then moved into private equity investing, but all of that centered on natural resources, broadly speaking, but specifically the metals industry. So spent a lot of time up and down the value chain, anything from box site refineries in Australia to working with the biggest mills in the country like Cliffs or JW Aluminum or things of that nature. And then in the investing side, spent really just as much time on what I'll call the kind of conventional resource as I did the technology. And I quickly realized the businesses that we were at times giving tens of millions or hundreds of millions of dollars were either using Excel spreadsheets to run their business or platforms that were based in or founded in the '80s, '90s and 2000s, and ultimately saw similar patterns in the recycling industry. And by no means is using a system like that wrong by definition or inherent, but ultimately saw a massive opportunity to bring an industry that is deceptively huge that no one really pays attention to outside of the folk in the industry and folks who we saw it when we started in 2020 who are quite literally essential workers, bringing that technology to them. And it's been an awesome six years. It's been very exciting. I think that what we wanted to do, clearly the market has responded well, which I'm sure we will get into. And what's really exciting for me is not only working with the folks in this industry on a day in and day out basis, and I can talk to my relationship to the industry and general thoughts, but also specifically as technology has not really progressed linearly over the last couple years, but obviously I had some step changes with AI, being able to innovate alongside this industry and partner with our customers to bring those step changes to an industry like this. It's been super exciting. Dave: Now, well, thank you for that background recap. So let's talk about the founding of the company. So where did the name come from, Green Spark? Gordon: Yeah, great question. I unfortunately can't take credit for it. That has to be my co-founder, but we wanted to pay respect to where the industry came from in addition to one of the overlooked elements of the industry, at least from a public perception per perspective. So green in and of itself is a call to, this is the sustainability of the industry. Again, I think that metal recycling is done, especially around the work that Rema's done has done a great job over the last couple years with, let's say, public perception and really educating folks on not only the importance of this industry, but the benefits of the industry from an environmental perspective, hence the green. And Spark actually comes from something that folks used to do without XRF analyzers or without technology. And the irony is not lost on me. So 50, 60, 70 years ago, and still obviously doable today, when you spark different types of metals, the color of the spark actually denotes the greater the quality. So a yellow spark versus a red spark. So again, we wanted to, again, combine the importance of the industry with a callback to what folks used to do without all of this new technology. Dave: Okay. No, well, thank you. I was really curious about the name, and that makes a lot of sense. It's both looking at the future and still remembering the past of the industry. I like that. So you and your co-founder, did you all bootstrap this or did you tap into some of your investment banking contacts and raise money? Gordon: Yeah, so we started that way and quickly realized to do what we wanted to do at the pace that we wanted to do it would require outside capital. So yeah, we ended up talking to folks in our network in addition to capital partners that not only understood what our thesis was, which is, again, it's relatively straightforward. At GreenSpark, we want every single scrapyard and metal recycling facility on planet Earth to use our platform. It's not necessarily easy, but it is straightforward. And we realized the kind of pace that we wanted to move. And candidly, given what customers are used to in this industry, i.e., One platform that spans a large part of their business, in addition to the dynamics in the industry, which is us against folks who have been here for 20, 25, 30 years who have lazed the trail for folks like us, we realized to close that gap, we wanted to partner with folks with the capital to scale the team and scale the product relatively quickly. Dave: Okay. Yeah, that makes sense. So what, and I don't want to get too technical, but I do want to get technical enough for this to make sense. So what was the differentiator or the different approach you were taking? I'm guessing you're cloud-based instead of on- premise. Is that a safe assumption? Gordon: Yeah, 100%. And yeah, I won't get too in the weeds, but I also think it's important to understand what our thesis was. Back then, what's changed over the last couple of years just given what's happened in technology? So yeah, I think from the jump, there are a couple just clear reasons why we felt good about the idea so far. Number one, we are entirely web-based. And I think importantly, we are web or cloud-based fully natively. So rather than trying to either acquire a business that's already been existing or partner with an existing software in the industry, we built everything from the ground up. It's entirely cloud-based. And I think that outside of the benefits just to this industry, really what we've seen resonate is one, the mobility of a platform like this. So the way that we describe it is every single time you touch the material, it costs you money. So if you can distribute technology and bring it closer to the material, things like scanning licenses right from your phone, things like mobile grading and inspection, things like cloud-based driver apps. You're able to cut down on those costs because you're actually bringing technology to the material, not the other way around. Number two is integrations, increasingly, which to zoom out a little bit is certainly not true two decades ago, but was true five or 10 years ago. Increasingly, customers like ours don't have the overhead to have a full-blown IT team to have developers on staff, and you're left with a bunch of one, either one system that can't do everything perfectly. So you have one system that other does stuff well, or you have a bunch of these disconnected systems that we call it this latent integration tax. It's not something that kind of hits you over the head, but when you have four or five or six systems, you have folks spending hours a day reconciling data between those two systems, making sure that you can get information from one to the other. And from day one, GreenSpark was really built as the modern connector in the industry. And again, back to our thesis, getting in every single scrapyard in the world, we want to focus on what this industry needs, and we want that

43 min
JAN 29

Ep071: IC-DISC from Start to Finish: The Complete Setup and Compliance Guide

Setting up an IC-DISC the right way can mean the difference between maximizing tax savings and having issues down the road. In this episode of The IC-DISC Show, I sit down with Brian Schwam, IC-DISC specialist and tax attorney, to walk through the complete IC-DISC setup and compliance process from start to finish. This conversation was inspired by a CPA request for a comprehensive guide covering every step of the IC-DISC journey. Brian breaks down the entire process chronologically, from the initial consultation to determine if a business qualifies, through the critical formation steps that can make or break your IC-DISC. We cover proper capitalization requirements, the infamous 90-day election window, why non-interest bearing bank accounts matter, and the draconian 60-day payment rule that catches many businesses off guard. He explains the difference between simple and transaction-by-transaction calculations, sharing an example where detailed analysis increased a client's commission from $4 million to $17 million on $100 million in export sales. Whether you're a CPA learning about IC-DISC for the first time or a business owner considering this strategy, Brian's systematic approach demonstrates why working with a true specialist matters when navigating these complex regulations. SHOW HIGHLIGHTS A detailed transaction-by-transaction calculation increased one client's IC-DISC commission from $4 million to $17 million on the same $100 million in export sales. Missing the 90-day election filing window requires a private letter ruling costing $35,000-$40,000 to fix, making it cheaper to just set up a new IC-DISC. The 60-day payment rule requires paying at least 50% of your estimated commission in cash or promissory note within 60 days of year-end to avoid disqualification. Setting up an IC-DISC with no par value stock is a fatal error that will cause the IRS to reject your election, regardless of everything else done correctly. A non-interest bearing bank account is essential because even $1.50 of interest income can disqualify your IC-DISC if no commission is paid that year. Export sales typically need to reach $3-5 million before an IC-DISC makes economic sense, though exceptions exist for businesses with exceptionally high profit margins. Contact Details LinkedIn - Brian Schwam LINKSShow Notes Be a Guest About IC-DISC Alliance Brian SchwamAbout Brian TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Dave: Good morning, Brian. Welcome to the podcast. Brian Hey, good morning David. Good to be here. Dave: So I, I now refer to you as the Bob Hope of the podcast because I believe that Bob Hope holds the record for the most appearances on the Johnny Carson Show. So that's why you're like the Bob Hope of the podcast. You have more appearances than anyone else with today's appearance. Brian That's good company to be in if you're of a certain, if you're of a certain age. Dave: Yeah. And I'm not even sure you and I are quite old enough to even be of that certain age. Brian I probably never saw him on Johnny Carson. Dave: Yeah, me too. So this is an episode that was requested by a CPA of one of our clients who was retiring and he had a new. Partner taken over and he said, Hey Dave, can you send over a link to the episode that just goes through all the details of the IC disc from start to finish? And I'm like, well, we don't have that episode, but it's a great idea. So that's what's behind this. So let's start at the very beginning. Somebody calls you up and says, Hey Brian, I need an IC disc, or I want an IC disc. What's the very first step? Brian Very first step for me is to say why. Dave: Okay, Brian tell me about your business. Dave: Okay. Brian You know, do you have qualified export receipts? Do you have qualified export property? That those are very complex areas. And some people might think they do when they don't, and others might think they don't when they do. Dave: Okay. Brian And more likely than not, they heard about IC disc from. Somebody they met at a, you know, business leader meeting or something and somebody said, oh, hey, I have an IC disc. You should have one. Dave: Okay. Brian And not everybody can utilize one, but there's many out there that can utilize 'em that do not. Dave: Okay. And do you charge anything for that consultation? Brian No, because to me it's just a fact finding. Dave: Okay. So step one, figure out if their fact pattern warrants having an IC disc. Brian Right? Right. Well, it's, it's actually, that's one step. If you deter, if we determine that yes, an IC disc makes sense because they do have qualified export property, they do have qualified export receipts, then we have to talk about volumes. Because, you know, if you have 500,000 of export sales, most like more likely than not. Disc isn't gonna make sense. Dave: Economic sense when Brian you factor Right. Economic, the Dave: costs Brian not right. There's not enough benefit to offset the cost at that, at that level, most likely. Of course. It [depends on what, what it is they're selling. Dave: Sure. Do you have a rule of thumb you typically use? Is it like three or 5 million where it typically makes sense or every case Brian For most, for most businesses, that's sort of the range that where it starts to make sense, but there are always exceptions to that. Dave: Sure. Brian So like I had a client that had, you know, 600,000 of export sales, but their bottom line profit was 80%. Dave: Okay. Brian So in that instance, hey, it made sense, but for most companies that have 600,000 of export sales, it, it probably doesn't make sense. Dave: Okay. So let's say they have 5 million of exports, good margins, looks like it makes economic sense. What's the next step then? Brian Well then we talk about what is the tax structure of that exporting company? Is it a flow through entity? Is it a C Corp? And how is it owned? Sometimes [00:04:00] it's owned by a foreign company that makes things way more complicated. Okay. It's owned by a combination of different shareholders, some of which are individuals, some of which are corporations. So that can be complicated. And sometimes it's just a, it's just a pass through entity that's owned by, you know, let's say it's an S corporation that's owned by a family owned. Dave: Sure. Brian You know, so you, you can have a lot of different fact patterns and that will dictate a lot of things with, with respect. Dave: Okay. Brian To how the disc is organized. Dave: Might that also be the time? You inquire as to whether multiple discs might make sense for their structure, or do you typically just focus on kind of getting the initial disc in place and then exploring that over time? Brian Probably the latter. Dave: Yeah. Brian Initially I, you know, the goal is, you know, do you have enough activity? Do you have the right kind of activity? What kind of benefit is it that you think you can, we can get for you? And then, okay, if the answer to all those are in the positive, then it's like, okay, how should this disc be owned based on what we're trying to achieve and where should it be set up? Because that also can have a lot of negative surprises if you set it up in the wrong place. Dave: Yeah. So let's say and I think there's some rules of thumb like if if the. Exporting company is a C corp, you typically don't want the C Corp to own the disc, is that correct? Brian That is, that is correct. And that's because a C corporation pays tax on a dividend. It receives from the IC dis, so effectively there's no benefit. Dave: Okay. So with a C corp, typically it would be the individuals, individual or [individuals that Brian are Oh, the, the shareholders typically, Dave: yeah. Brian You know, possibly a management group could be involved as well, but typically we're talking about the shareholders of the C corporation. Dave: Yeah. And the shareholders of the disc do not necessarily have to mirror the shareholders of the C corp. Right. Brian That is sort of up in the air. I, I prefer that to be the case, but it doesn't have to be the case. Dave: Yeah, like in a simple example, census C Corp owned by one person and when they set it up, they wanna add a couple key employees to it. Brian Yeah. That, that, that's probably fine. You know, there's some old revenue rulings out there from the early 1980s that have a bad fact pattern, which the IRS held that the structure created gift tax issues, but that was like a mom and a dad and a son and a daughter, and mom and dad set up a disc and then gave the stock to the son and the daughter. And, and so that, that's, I see that's a bad fact pattern. What you described is a completely different fact pattern. There's no donative intent in that fact Dave: pattern. Yeah. Okay. In Brian fact, that I have a client that started out where the disc and the C Corp was. It did have mirror ownership, but over time, that has changed dramatically. But still, there's no donor of intent because we have all these unrelated families that own shares in the company in this quote company. And when there have been redemption opportunities over the years, they have the choice redeemed, the disc shares redeemed. The, the C corp shares redeemed them both. So some of like kept their dis shares, but gotten rid of the C Corp shares and vice versa. But really without the donative intent, plus some court case you know, precedent, I, I'm not [00:08:00] so concerned about that issue. Dave: Okay. Now let's switch gears and let's say it's a flow through an S-Corp partnership et cetera. Do you typically want the individuals to own it in that situation? Say that the company has three shareholders, would you just make them the three owners of the disc? More often than no

1h 1m
12/12/2025

Ep070: IC-DISC Myths, Mistakes, and Opportunities with Brian Schwam

Avoiding simple mistakes with the IC-DISC can mean the difference between maximizing tax benefits and leaving money on the table. In this episode of The IC-DISC Show, I sit down with Brian Schwam, National Managing Director of International Tax Services at WTP Advisors, to talk about the most common IC-DISC misconceptions that trip up practitioners and the underutilized opportunities many businesses are missing. Brian walks through the critical timing rules that confuse even experienced CPAs, including the 60-day and 90-day payment requirements that many practitioners misapply. He explains how the reasonable estimate safe harbor actually works and why paying the minimum amount can accidentally cap your commission at twice that figure. We cover the ordering rules for distributions, the often-misunderstood $10 million threshold, and why the transactional calculation method isn't nearly as impossible as people think. Brian also clarifies that IC-DISC dividends are subject to the net investment income tax, despite what some practitioners might believe. The conversation shifts to creative structures most companies never consider. Brian explains how multiple DISCs can fund executive bonuses at qualified dividend rates instead of ordinary income rates, saving both employment taxes and up to 17% in federal tax for recipients. He describes evergreen dividend resolutions that eliminate the stress of year-end cash movements and shared-DISC structures that make the strategy economical for smaller exporters with under $3 million in sales. These approaches work for both flow-through entities and C corporations looking to avoid double taxation. After more than three decades in international tax, Brian brings clarity to a strategy that looks deceptively simple on paper but contains hidden complexity at every turn. This episode delivers practical guidance you can use immediately, whether you're a practitioner helping clients or a business owner evaluating your own structure. SHOW HIGHLIGHTS Paying the minimum 50% under the 60-day rule accidentally caps your total IC-DISC commission at twice that amount, limiting flexibility. Companies with export sales over $10 million can still use an IC-DISC—the cap only limits income deferral, not eligibility. Multiple DISCs can fund executive bonuses at qualified dividend rates, saving up to 17% in federal tax versus ordinary income. The transactional calculation method isn't impossible—most companies in 2025 can pull the data needed to maximize their IC-DISC benefit. Evergreen dividend resolutions eliminate 60-day and 90-day payment stress by automatically distributing commission rights on December 31st each year. Shared DISC structures let exporters with under $3 million in sales split compliance costs while each partner keeps their full tax benefit. Contact Details LinkedIn - Brian Schwam LINKSShow Notes Be a Guest About IC-DISC Alliance Brian SchwamAbout Brian TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Dave: Hi Brian Welcome to the podcast. Brian: Hi Dave. Thanks for having me. Excited to be here. Dave: Yeah, my pleasure. So quick intro, Brian is, what's your title with WTP? Brian: National Director of National Managing Director of International Tax Services, which encompasses export incentives as well as more general international tax consulting. Okay, Dave: And that's at WTP advisors? Brian: Correct. Dave: And you and WTP advisors are founding members of the IC-DISC Alliance along with my firm and myself. Brian: That is correct. Dave: And so are you brand new to this international tax business? Did you pick it up last year or something? Brian: That's funny. I don't think I look like I picked it up last year. I've been been full-time international tax since 1992IC, and prior to that I spent a few years as a generalist, which I think makes me a better international tax person, but it's been a few years, been around the block a few times. Dave: Well, I think it makes you better. I always introduce you as the IC-DISC guru. Now that Neil Block has retired, I think you can now take over the mantle of godfather of the IC-DISC, Brian: Right? Or the step godfather. I don't know if anyone can ever replace Neil. He had a lot of knowledge, has a lot of knowledge in this area and a lot of experience, and I'm just kind of flattered to be compared to him. Dave: Well, Neil was, I think my inaugural or second guest, and I think he's only been on the podcast once. So I think you're trumping Neil with this either your second or third visit. Brian: I think it's the third visit. And Neil's retired and joined the Good Life and I'm not, so that's probably why I've beaten them as far as number of appearances. Dave: There you go. Well, today I want to talk about IC-DISC. I want to talk about misconceptions and maybe underutilized opportunities. So the IC-DISC is straightforward as can be cut and dried. Anybody can prepare the return, anybody can do the calculation. Easy peasy. There's nothing to your toe on. Is that accurate? Brian: That's far from accurate. Okay. Strength. Yeah. A lot of practitioners think that is the case, but I've seen more than a handful of IC-DISC returns and IC-DISC calculations done by generalists that definitely have a flare for not knowing what they're doing or not understanding the rules. And for a six page tax return that looks very straightforward. You'd be surprised how many of them are completely incorrect. Dave: Yeah, it's kind of deceiving, right? Because even the instructions for the return are only a handful of pages, right? Like six or eight pages. Brian: And then there's a couple of lists of codes and things that make 'em a little longer. But yeah, there's not much to it. But I mean, initially there are some statutory and regulatory things that have to be done, have to be done the correct way, and the rules are very draconian. If you don't do it the correct way, there's really no way to remedy the fact that you set up, you just deal with the consequences of having a disqualified IC-DISC, which means you've lost your IC-DISC benefits prospectively and you set up a new one or you forego the benefits No in between, really? Dave: Yeah. Brian: So some of these misconceptions that I've run into could lead to a IC-DISC being disqualified. Dave: So what's the first one that comes to mind? Brian: The first one that comes to mind really for me in practice is how does the 60 day rule and the 90 day rule work, this has to do with when do I have to move money to the IC-DISC? And some people don't understand it and they do things that make it not a problem. Other people do things, they don't understand it and it becomes a problem. So the 60 day rule basically says you must fund a reasonable estimate of the IC-DISC commission to the IC-DISC within 60 days after the end of the IC-DISCs year. It sounds very straightforward, but some people ignore that rule and some think they have to pay it all before the end of the year, but they don't have a 60 day window after the end of the year to accrue that IC-DISC commission and pay a portion of it. The other thing I see people do with the 60 day rules, they don't have all the information. They estimate a number. They say, oh, let's say the commission's going to be a thousand dollars and they pay $500 to the IC-DISC by the end of the 60th day. Well, what have they just done? Well, the 60 day rule says, yeah, you have to pay a reasonable estimate in the regulation. There's a safe harbor that says a reasonable estimate is at least 50% of the final IC-DISC commission. So by moving the least amount of money possible, they then limit their potential IC-DISC commission to two times that number. So rather than saying, oh, I think my IC-DISC commission's going to be a thousand and I'll pay 800 so that I have flexibility to go up to 1,600, they pay 500 and it can never be more than a thousand because there's a lot of information that's going to come out after the end of the year that's going to affect taxable income. And they generally don't know those things within the first 60 days after year. Dave: And what about for, I think this is for accrual basis taxpayers or accrual basis related suppliers. What about if it's a cash basis related supplier? Brian: Well, if it's a cash basis related supplier, now we're outside the DIS rules, but we're in the tax accounting. And in order to get a deduction, the payment does need to be made before the end of the year. If the payment is made after the end of the year, within that 60 day window, you've now pushed the deduction to the subsequent year, which really most people wouldn't be happy with. They want the production in the year that the exports arise, not in the subsequent year. So the other rule having to do with the moving of the cash is the 90 day rule, which says that you have to pay the IC-DISC any remaining commission within 90 days after the commission has been finalized. Well, finalized really means when did I file my IC-DISC return? And so it's an original return. It can be filed as late as eight and a half months after the end of the year. So you really have 11 and a half months from the end of the year to pay the remaining amount. So if we assume calendar year, that's a September 15th filing and a December 15th funding deadline for the remaining commission. I see a lot of practitioners out there that think the 90 days ends on the filing of the IC-DISC return, not starts on the filing of the IC-DISC return. So then they rush to pay that money and then they think they have a problem if they haven't paid it by the time they file. So I mean, there's no harm in paying it early, but that's not how the rule works. And then if someone's determining and amending a IC-DISC return and they owe more funds to the IC-DISC, they have 90 days. So when they file that IC-DISC return, amended IC-DISC return to ma

52 min
11/21/2025

Ep069: Subscription Pricing Success with Raffi Yousefian

Success in professional services isn't about doing more—it's about doing less, but doing it exceptionally well. In this episode of The IC-DISC Show, I sit down with Raffi Yousefian, CEO of The Fork CPAs, to talk about how extreme specialization transformed his accounting firm from a general practice into the leading restaurant and bar controllership service in the country. Raffi shares the counterintuitive journey of deliberately shrinking his client base to accelerate growth, ultimately tripling revenue within 18 months of selling off 30% of his practice. We explore how Raffi evolved from serving three industries to exclusively focusing on restaurants and bars, and why weekly financial reporting creates competitive advantages that monthly statements simply can't provide. He breaks down the economics of restaurant operations, explaining why 2% savings in food costs can represent an entire profit margin when you're working with businesses that operate on 5-7% net profits. The conversation reveals how subscription pricing combined with deep industry expertise solves the profession's labor shortage by making firms more profitable and attractive to talent. What strikes me most is how Raffi's specialization philosophy mirrors successful models in other industries, from medical concierge services to dating apps. If you've ever wondered whether narrowing your focus could actually expand your opportunities, this conversation provides a compelling roadmap. SHOW HIGHLIGHTS Raffi sold off 30% of his accounting practice to focus solely on restaurants and bars, then tripled the remaining 70% within just 18 months. Weekly financial reporting in restaurants isn't a luxury—it's survival, since a 2% swing in food costs can represent your entire profit margin. The Fork CPAs moved from "insecure niching" with three industries to hyper-specialization, proving that doing less actually accelerates growth when done with expertise. Restaurant operators typically process 300-400 invoices monthly for a $3-4 million location, making specialized systems and processes non-negotiable for profitability. Subscription pricing in accounting solves the labor shortage by making firms more profitable, allowing them to pay better and attract talent to the profession. Specialization creates resonance with ideal clients who say "you sound like my soulmate" rather than casting a wide net and hoping something sticks. Contact Details LinkedIn - Raffi Yousefian LINKSShow Notes Be a Guest About IC-DISC Alliance About The Fork CPAs Raffi YousefianAbout Raffi TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Dave: Good morning, Raffi How are you today? Raffi:: Good morning, David. I'm doing well. And yourself? Dave: I am doing great. I appreciate you coming on the podcast. Just a formal introduction, you are Raffi Yousefian, and you're the CEO of the Fork CPAs. Is that correct? Raffi:: That's correct. And I appreciate you having me. I'm excited to have a conversation with a like-minded individual in the accounting industry. Dave: Yes. I've been looking forward to this for some time. So what part of the world are you calling into from today? Raffi:: I am in Brooklyn, New York City. Dave: Okay. Raffi:: Specifically Williamsburg Greenpoint, which is meant to be the hipster capital of the world in case you're interested. Dave: Yeah, I have heard that name. For that reason, I don't think I've ever been there. I haven't been to New York in about 15 years, and I think I rarely have ever been anywhere but Manhattan. So I'll have to be sure to check that out the next time I'm in town. Raffi:: We would love to have you. We're right across the East River. Dave: Okay, Raffi:: Great. Great nightlife scene, great food scene. A lot of sighting. New concepts are popping up every day, bars, restaurants, so it's a great place to be. Dave: That sounds awesome. Well, first of all, let's get to the name. What the heck does The Fork CPA's name mean? Usually the CPA firm is named after the founder or the partners. So what's the fork? What's the meaning of the fork? Was one of your partners named Fork or talk? Raffi:: No. So the fork, I have a 15 slide presentation on it. Maybe I can walk you through it one day. But the fork represents a tool that is highly agile with very sharp and fine edges, and it also relates to the restaurant industry and represents us and our values as a firm. So that's where the four comes from. That's the, in a nutshell description. And then the CPAs, you add that to clarify that we're doing accounting and tax, so that's where work branding comes from. Actually, we launched the brand in 2022, so it hasn't always been our name. Dave: Okay. Well, I really like it. So are you a New York native? Raffi:: I'm not. I'm actually from dc so lived in DC for about 10 years. That's where I started the firm, and I moved up to New York in 2021. Dave: And you went to college in Maryland? Raffi:: Yes, university of Maryland College Park. Dave: Okay. And then you graduated and you went the big four route with ENY? Raffi:: That's right. I worked at ENY for about three and a half years, and then moved to a smaller firm for about a year and a half, two years after that. And this was in 2016 when I launched the firm that I currently have right now. Dave: And you just started it from scratch? Raffi:: So initially the firm was called ROYCA LLC, and I just used my initials with CPA at the end just to get started. Okay. I started it from scratch. At the time I had the potential opportunity to acquire a restaurant bookkeeping business, and that is really what initiated me or catapulted me to taking that leap from moving from a W2 job to starting my own business. The acquisition actually never ended up panning out to be anything. It ended up being more of like a referral relationship. So it was good in that it incentivized me and motivated me to actually take the leap. But as we started from scratch, didn't end up buying any book of business or anything like that and just grew from there January 1st, 2016. Dave: And is that how the restaurant and bar capability started, was from that referral relationship with that bookkeeping firm then? Raffi:: Yes. Well, the referral relationship was a result of me taking over my brother-in-law's finances, and he had a restaurant and catering business. Dave: Oh, I Raffi:: See. And so his accountant was ending their relationship because he was moving on to be the CFO of a big fast growth restaurant group. And so I asked to meet with him. I said, can I meet with the former accountant? Maybe he has a book of business that he wants to sell or get rid of. That's not where the interest in restaurants started, but that definitely had an impact on moving towards that restaurant niche at some point. My first real client was a restaurant business. Dave: Okay. Raffi:: Yeah, Dave: That is great. You've got your CPA firm, it's growing. And then at a point you realized you had a concentration in the restaurant bar business. Now, conventional wisdom says when you have a concentration like that, whether it's client industry, you need to fix it by diversifying, but you decided to go in a different direction, right? Tell me the story. Raffi:: Yeah, so initially the purpose of the firm was to provide an alternative and frictionless experience to traditional public accounting. And this was 2016 when web-based apps were all very new, and even the cloud firms were very server-based. You log into this server and it wasn't very web-based, so even cloud modern firms were still very clunky, and the client experience was terrible. So the idea was, okay, replicate the public accounting model just in a more modern and frictionless way. And so we were still providing a lot of the traditional services you get in a small public accounting firm, 10 forties, monthly bookkeeping, annual bookkeeping, industry agnostic, and one of the first moves. So that was, people love that, right? It was new cutting edge, modern virtual CPA firm. And then I think by year two, we decided we had to narrow down what we were doing. Raffi:: Again, we were trying to be everything to everyone just in a more modern way. And so I think the first change we made was limit our service offering to monthly services only. So value-based billing, fixed fee. It was a mix of value-based billing and fixed fee at the time. So we basically told all of our annual clients, mostly 10 40 clients, sorry, if you want to work with us, you have to have a business, and we have to own the entire accounting process from monthly all the way through your business tax preparation. So that was the first change we made. We didn't specialize just yet. Dave: And what year was this? 2017. Raffi:: I think this was around 2017 or 20 17, 20 18 then. So that worked really well. That allowed us to scale and grow much faster. Now everybody's on a monthly fixed retainer. You're not doing all this work during tax season, those three months trying to do 12 months of books. So there's no bottlenecks during tax season. For the most part, 10 forties are still very much a bottleneck. And in 20 19, 20 20, we decided to narrow down even further and say, okay, we're going to service three industries. And I like to say this is the insecure way of niching down. And so we narrowed it down to, I believe it was restaurants and bars for sure. Nonprofits and professional Dave: Services. Raffi:: And so that helped again, even better. Now we can scale and grow even faster with more efficiency. And then 2022, we were at a point where the restaurant and bar industry vertical was growing much double, triple what our other verticals were growing. And I believe it was just a natural result of our passion was behind that vertical, the professional services and nonprofi

54 min
10/22/2025

Ep068: Beyond Banking Silos with Randy Gartz

In this episode of the IC-DISC Show, I sit down with Randy from Trinity Bay Capital to talk about how specialized capital advisory bridges the gap between growing companies and the financing they actually need. Randy spent 17 years in traditional banking at First City and other institutions before moving into capital finance in the mid-1990s. His transition came from frustration with banking silos that prevented common-sense solutions for growing companies. After traveling extensively as a capital finance professional and later serving as president of a bank, he launched Trinity Bay Capital to help companies access everything from asset-based lending to purchase order financing. His approach differs from typical brokers because he pre-qualifies deals using his banking expertise, then targets just three carefully selected lenders rather than shotgunning dozens of institutions. What makes Randy's work compelling is how often he solves problems without charging fees. One client I referred received three competitive term sheets that gave him leverage to renegotiate with his existing bank, getting everything he wanted at no cost. Randy's focus on matching companies with conventional banks whenever possible, even when capital finance would pay higher fees, demonstrates how his business model prioritizes client outcomes over transaction volume. His internal 48-page reference guide of specialized lenders reflects decades of relationship-building across oil and gas, maritime, manufacturing, and distribution sectors. Randy's philosophy that "I don't need to work, I do this because I enjoy it" explains why 75% of his pipeline comes from Texas energy companies that conventional banks won't touch, and why he celebrates when clients find better deals elsewhere. SHOW HIGHLIGHTS Randy turns down fund management opportunities that would pay more because accepting them would recreate the banking silos he left to escape. Trinity Bay Capital targets just three carefully selected lenders per deal instead of shotgunning 12-20 institutions, achieving 95% term sheet success rates. A construction mat company couldn't get financing because their primary assets wear out quickly, until Randy found lenders who advance directly on depreciating equipment. Randy helped a frack pipe manufacturer secure $30 million after eight conventional banks declined, simply by knowing which bank was allowed to do oil and gas deals. One client found a better deal independently, and Randy celebrated it instead of pushing his commission, telling him "as long as I can work with you, that's awesome." Randy's success fee from conventional banks is often reduced compared to capital finance companies, but he always takes clients there first because it's what they deserve. Contact Details LinkedIn - Randy Gartz LINKSShow Notes Be a Guest About IC-DISC Alliance Randy GartzAbout Randy TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Dave: Good morning, Randy. How are we today? Randy: We're doing great. How are you? Dave: I am doing great. Thank you. Where are you calling in from today? What part of the world are you in? Randy: Houston, Texas. Dave: Okay. Me as well. So I was just trying to think, how long have I known you? I think it's been over 20 years. Randy: It's been since the mid nineties. Dave: Has it been that long? Wow. So more like 30 years. Randy: Yes. Dave: We're getting old, my friend. Hey, I look a lot older than you did. That's subjective. So I've got some questions for you. Some I think I know the answer to, some I don't. Why don't we start? I'm a sequential learner. Let's start at the beginning. Where are you from originally? Are you from Southeast Texas? Originally? Randy: I'm an Air Force brat and I was born in El Paso, Texas. Dave: Okay. Randy: And we moved about every two years after that until I was in high school. Well, actually in high school I was at three different locations. And then starting from college on Texas a and an, I've been in Houston ever since. Dave: Why did I forget that you're in Aggie? Because where I went to school and I guess we've been able to get past that. Randy: I don't talk about that much. It's probably one of the main reasons a and m was good to me, but in my past. Dave: Yeah, no, I hear you. I'm just having fun with you. So I suppose moving every two years, that will help you learn rapport, building interpersonal skills, I suppose. Randy: Absolutely. That helped me go to city to city when I was traveling for capital finance companies and just introduce myself about a problem and just, hi, how are you? Who are you? What do you do? So yes, absolutely. Dave: So your degree from Texas a and m? Finance. Randy: Finance. And then I went to U of H and worked on an accounting degree. Dave: Okay. So what was your first job out of college? Randy: Oh, it was at credit training program for First City and Texas. Dave: Oh wow. They really had a great training program, didn't they? Randy: Two years long. Yeah, absolutely. We were working sometimes seven days a week and Saturday and Sunday the air conditioner wasn't working, wasn't on in building. And it's enough like it is today. Dave: No, I remember when I was at Arthur Anderson working one of our clients' weekends, those high rises had air conditioning on the weekends. You had to pay for it and we were not, were deemed worthy of air conditioning on the weekends. Randy: That's right. That's right. Dave: So you started out at traditional banking, Randy: Started at traditional banking, did that for about 17 years. First City and all of its precursors. First city in bank. Bank one, they finally sold to Chase. And then right after they sold to Chase, my manager at the time had gone to a capital finance company and he asked me to follow 'em. And that's when I got involved with Capital Finance. That was back in mid nineties. I enjoyed it. I enjoyed being on help companies. It wasn't like you're in silos at banks and the regulators can only allow you to do so much that there's so much more out there for companies to be able to provide them with growth capital, turnaround capital, acquisition capital that most people, most CFOs don't even know. And so I really enjoy that. I went back to conventional banking when I'm woman by the name of Mary Bass and I think you might know her. Dave: I know Mary. Yeah. Randy: She followed me for two years trying to get me to go to Redstone. Randy: Redstone was a small little bank. I didn't want to have anything to do with it. I didn't want to go to back to banking after I'd gone to Capital Finance and after two years of her calling me every two, three days a week when I was traveling three and a half weeks out of every month for four years Earth saying stuff like, rainy, where are you? When's the last time you saw your son pitch? When's the best time you were with your wife? What'd she do tonight? It's like, Mary, I'll interview. I've got to know that if I say no to this interview, you're not going to call me anymore. Well, I went on an interview, I met with David Chin Decker and he got me to go back to conventional finance and it was a good thing at the time, both he and Bob Hendrickson, who was president at the time of Redstone, had both grown up in the national division of First City's asset-based lending. Dave: That's Randy: What they were trying to bring over to this very small bank. We grew that bank from 58 million to 1,000,000,002 in three years. Dave: That is serious growth Randy: And most of those customers are still there. So it worked. But when you go on to other banks and all the silos that they have, you can't grow. You can't help companies as much as you would like if you know what's available. And I don't mean that to be mean to conventional bankers. Conventional bankers, I have all their respect or I respect them tremendously, but I just think that don't know what's still available. So Dave: It's Randy: Right going out there and trying to educate them to know, Hey listen, if you can't do this, here's what we can do. Dave: Yeah, no, I get it. And I know that as is typical in the banking business, most bankers don't serve at one bank for 40 years. There's always movement. And what I'd like to do though now is I'd like to skip forward to your May gig. I mean, I think the bottom line takeaway was your career was split between traditional corporate lending from the banker level all the way up to senior executive level. You've done the capital finance piece. It sounds like you wanted to create a new combination, new offering to the marketplace. So talk to me about what prompted you to start Trinity Bay Capital. Randy: I think, and I won't name his name, but I had just come back one day from booking an $85 million deal. I was by myself. I was doing all the settlement work. I was there for eight hours at this closing. And when I came back to the bank with all the paperwork and I walked in and I was really happy we got a large deal done, which eventually turned into a much larger deal. The first words out of my president's mouth was, Randy, any more deposits well understand. But this was a pretty good deal. And that together with all the silos that conventional banks have, the inability to do things that should be done, common sense things, but just conventional banks can do because of the regulators and because you can't put a hundred bankers out there and just let them be run out there and do everything they want to do. You can't do that makes conventional bankers conventional. But after being an capital financed group and also being at Redstone's Mezzanine and Equity Group, it taught me all the additional options that we have out there to be able to provide. So I thought at the time I was 63 years old, do I want to go to another bank? Am

34 min
09/18/2025

Ep067: Highest and Best Use with Mike D'Onofrio

Every business transaction has hidden tax opportunities waiting to be discovered, if you know where to look. This week on the IC-DISC podcast, I spoke with Mike D'Onofrio from Engineered Tax Services, who's spent 17 years helping business owners maximize their tax strategies through engineering-based specialty tax services. Mike joined ETS after working in corporate M&A and private equity, where he first recognized the critical need for specialized tax expertise during business transitions, and what struck me about Mike's approach is how his firm combines professional engineering expertise with tax strategy to deliver comprehensive solutions. They handle everything from cost segregation studies and energy incentives to insurance optimization, processing hundreds of cost segregation studies weekly across every property type imaginable. Mike's philosophy centers on what he calls "HABU" - highest and best use - focusing on their core expertise while partnering with specialists like us for complementary strategies that create immediate opportunities for businesses to improve cash flow. The conversation reinforced something I've noticed across successful advisory relationships: the best results come from specialists who stay in their lane while building collaborative teams. Mike's emphasis on maintaining human intelligence alongside technology adoption resonated with my own experience that relationships still drive business success. SHOW HIGHLIGHTS ETS processes hundreds of cost segregation studies weekly, from single-family rentals to NFL stadiums, proving tax strategies scale across all property types. The recent bonus depreciation bill plus R&D tax credit enhancements now allow 100% first-year expense capture, creating immediate cash flow opportunities. Mike's "HABU" principle (Highest And Best Use) drives their decision to stay specialized rather than compete with partners in overlapping services. Engineering expertise combined with tax strategy creates unique value—ETS knows roof types, electrical systems, and construction costs that insurance carriers demand. After recognizing insurance as clients' second biggest pain point after taxes, ETS launched a complementary insurance division leveraging existing property data. Mike advises his 25-year-old self to surround himself with people much smarter, crediting uncomfortable situations with experts as his greatest learning opportunities. Contact Details LinkedIn - Mike D'Onofrio LINKSShow Notes Be a Guest About IC-DISC Alliance About Engineered Tax Services Mike D'OnofrioAbout Mike TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Dave: Good morning, Mike. Welcome to the podcast. Mike: Good morning, Dave. Great to be here with you today. Definitely. Dave: So where are you located at the moment? What part of the world are you in? Mike: Yeah, well, I'm in my home base today in Charlotte, North Carolina. Dave: Okay. Mike: Yeah. I've always liked Charlotte, a pretty part of the country. Charlotte's a beautiful place, man. I grew up in Cleveland, Ohio. Great school, high school, college, so I know the Midwest and I still love Cleveland, of course, a Browns fan and a Indians guardians fan and Cavs. But moved to South Florida right after that, right after college and was living in Fort Lauderdale and West Palm Beach, and we're still based there. Our corporate acres is there, but my wife and I had originally met in Charlotte, and we love the seasons. I love the ability to, I see those mountains in your background. I love the ability, we don't have the same type of mountains as you do, but love getting out to the Blue Ridge and Smoky Mountains, seeing the fall, the leaves, and can get to the beach, can drive down to Wilmington or Charleston in a couple hours. So we're right in the middle. We're bus to be here and have the Dave: Options. Yeah, it's a great location. You have four seasons and a slightly milder winter than Cleveland, Mike: That's for sure. It seems like winters have softened up a little bit in Cleveland, but man, I remember the mornings going out to the bus when I was a little kid with snow piled up over my head and the drifts up on the side of the house. I'll never forget those days. That was awesome. That was a real winter. But now in Charlotte, if we get a dusting of snow or a little bit of ice, it's usually gone by noon. Dave: Yeah. I was born and spent the first 13 years of my life in northwest Iowa and was the oldest of two boys. So I remember having to get up an hour early to go shovel the driveway just so mom and dad could get to work in that. So yeah, my saying is the worst Texas summer is still better than the best Northern Winter is my theory. Mike: You got it, man. High five to those of us that have shoveled snow driveways, walkways, figured out a snowblower with the chains on the wheels and all that fun stuff that comes with winter. Dave: So by some people's interpretation, we come from the same place because I've discovered people not from the Midwest, they think Ohio, Iowa, and Idaho are all the same place. Mike: Yeah, Dave: They're just all somewhere up there. Yes. It's up Mike: Somewhere up there in the Midwest. Folks like myself grew up in Ohio and Cleveland and Detroit and Chicago. I mean, definitely they think that's the heart of the Midwest, but they forget about the Midwest. Goes pretty far west. Right. Dave: It does. All the way to the mountains. So, well, let's get into it. So when did you join engineered tax services? Mike: Wow, it's been a big part of my life. Exciting journey. Like I said, after college I moved down to South Florida and my background was in more corporate m and a private equity working on the finance side of things in transactions, in private equity back in the day, they would call it kind of strategic intermediary work where we would either work on the buy side or sell side with the client. So I worked with a lot of clients and business owners that were maybe interested in transitioning out of their business. Maybe they were a food manufacturer or distributor. And interestingly enough, one of my mentors in life, his name is Bruce. Bruce was one of the first international CEOs with McDonald's corporation. Oh, really? Yeah, one of Ray Croc's, first five or six right hand key people. Before McDonald's had any international business, the first place that they went outside the US was to Latin America and the Caribbean. And I met Bruce in South Florida my early career, and we really saw an opportunity together, old school style, to go through his Rolodex and be like, man, I have a lot of relationships within the McDonald's and the finance ecosystem. So we started working with many different company owners, like I said, distributors, producers of different things, and we had some great success. And along the way I saw that there was really a need to understand specialty tax credit and incentives and strategies depending on who the client was, whether it was the seller of a company or a property or buyer of that was really to dig into the details of, Hey, what's the best way to make this transaction as tax efficient as possible? Tax was always the first pain point, either from the seller's point of view, maybe there was a big potential cap gain situation, how to structure that deal or from the buyer or investor's point of view, how to maybe capture some additional credits and incentives that they hadn't thought about, like research and development tax credits, or maybe there was a big piece of real estate or property involved in the transaction, like a manufacturing facility or office buildings or retail locations. So while digging in deeper in some of those transactions, I met Julio Gonzalez in Engineered Tax Services. She's going on 17, 18 years ago, and it was a small boutique firm at the time, engineered tax, and we were very focused on serving CPA firms nationally as that specialist. And I saw a great opportunity to really become a more diverse, focused specialist, and not only help CPA firms, but help private equity, the real estate investor, anything in that transaction to really help understand the tax code for the bonus depreciation or energy credits and incentives. Sure you do. Maybe they do domestic or international type of trade in that business, and there's a structure that might be a little bit more savvy than they're familiar with. So man, 17, 18 years ago is when I started with ETS, and we've grown substantially over the years from a handful of people in a small boutique firm in downtown West Palm Beach, Julio, and myself and Kim and Heidi and others, though I think pretty well, and we've really expanded, and so now not only still working with those CPA firms nationally, to be that specialist working with other professionals like you of really just how to maximize each transaction, understand the inevitable changes in the tax code with the different administrations. There's the Tax Cuts and Jobs Act, Trump 1.0, 2.0, what happened just now in July with a big beautiful bill, but the CARES Act, the Path Act, the previous tax Cuts and Jobs Act, the CHIPS Act, whatever the stimulus plan or new tax incentive of the day was. That was our job to really dig into that, be a great job educating around that and bringing it as proactively and transparently to the CPA community as well as the investors and owners. Dave: Yeah. I became acquainted with ETS and about the same time you did, and Julio invited me to South Florida and gave you the tour of the cool office building that you all rehabbed. Mike: Yeah. Then he was Dave: Kind Mike: Enough to, was that the one on a Vernia Street when he had just purchased it? Was it, Dave: I forget the street. It was like maybe a six story old building Mike: That's still his building and our corporate headquarters on the corner of Vern

36 min
08/07/2025

Ep066: From Silicon to Steel with Ronak Shah

In this episode of the IC-DISC show, I sit down with Ronak Shah to discuss his transition from a corporate career at Intel to entering the scrap metal business, to founding a successful scrap metal business in New Caney, Texas. We talk about the motivation behind his career shift and the mentors who guided him along the way. Ronak opens up about the challenges he faced while transitioning from a large corporate environment to a smaller, more hands-on business. We also explore Ronak's decision to sell his business and the unexpected opportunities that arose from that choice. He reflects on the experiences gained throughout his career, emphasizing the importance of taking calculated risks and adapting to change. His story offers insights into the value of connecting past experiences to current ventures, even when the path isn't always straightforward. Finally, we discuss navigating today's fast-paced digital world and the importance of maintaining a low profile on social media. Ronak's journey highlights the balance between professional growth and personal fulfillment, making this episode a thoughtful exploration of entrepreneurship and resilience. SHOW HIGHLIGHTS I explore Ronak's remarkable transition from a corporate role at Intel to establishing a successful scrap industry business in New Caney, Texas, emphasizing his desire for more tangible work and the influence of key mentors. The episode delves into Ronak's career progression at Schnitzer Steel and Alter Trading, where he gained critical insights in non-ferrous recovery and learned the importance of agile, smaller teams in driving technological advancements. Through journaling and introspection, Ronak clarifies his professional desires, leading to the creation of Levitated Metal and reflecting on personal challenges, including his late wife's battle with cancer. We discuss the financial strategies Ronak utilized in his entrepreneurial ventures, such as leveraging IC-DISC tax advantages and aligning financial decisions with personal values. The conversation highlights Ronak's leadership insights, his decision to pursue a smaller business for personal fulfillment, and the impact of selling his business on both his professional and personal life. Ronak shares reflections on his entrepreneurial journey, touching on the lessons learned from his career, the importance of taking risks, and the role of hindsight in connecting the dots of his experiences. The episode concludes with a discussion on navigating the complexities of the modern digital landscape and the importance of maintaining a low profile in a rapidly changing social media environment. Contact Details LinkedIn - Ronak Shah LINKSShow Notes Be a Guest About IC-DISC Alliance About Levitated Metals Ronak ShahAbout Ronak TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Dave: Hi Ronak, how are you today? Roank: Good David, Nice to see you again. Dave: Likewise, and where are you calling into from? Where are you in the world at the moment? Roank: I'm at my factory in New Caney, Texas, just a little bit northeast of Houston Great. Dave: Now are you a native Houstonian. Roank: I'm not, so I moved out here in 2019 to build this factory and start this business. I think I've been to Houston once in the prior year to visit for the first time and never before, other than perhaps through the airport. So, I didn't know a lot about Houston. I'm not saying that I know a lot about Houston now, but it's been a great place to build a business. It's been a fine place for my kids to grow up. Dave: It's been good it's been a fine place for my kids to grow up. It's still good. Yeah, it's. Uh, it's kind of a, it's kind of a hidden gem in a lot of ways. Uh, you know houston is, it's got a lot going for it that if your only experience is just driving through town or going through the airport, you know, I mean you hear traffic, humidity, heat, urbanl and you're just kind of like, you know, yeah, it doesn't sound like my kind of place. Roank: Yeah, well, it would be a lot more believable if you did not have a Breckenridge background behind you. Dave: True, yeah, that is the Breckenridge background for sure. So where did you grow up then, if you didn't grow up in Houston? Roank: I grew up in upstate New York so my dad was one of the many immigrants that came over in the late 60s, early 70s. They were looking for people with medical training and background. So he came over from India, lived in New York. I was born in New York City but very soon after grew up in the middle of the Finger Lakes. We moved to Syracuse when I was in middle school and then I went to Boston for undergraduate and I bounced kind of between Boston and London and back to Boston, then to Portland, oregon, which is where I came into the scrap industry and lived for some time in St Louis. I lived there for about nine years and from St Louis to here. Dave: Okay. So what made you get into the scrap business if you didn't have a family history in it? Roank: Yeah, it was just very random, my interest in the scrap industry. I think, the truth of the answer is probably the more interesting one. So after mba I was working, I was an operations guy and I was working at intel corporation in portland, near portland oregon, and loved being in portland. It's a fine place to live. But intel was, I mean, a huge company, right, 80 000 people, and just like the process of making something that was about this big, the the size of the core diet, multiprocessor, microprocessor this wasn't sufficiently interesting to me and I was too far from it, as well as my chain organization. Yeah. It didn't feel tangible enough, and so that was one part of it. But then the other part of it as well was you know I was there as a worker bee, you know, in a reasonably senior job for someone of my age, but then, you know, in a reasonably senior job for someone of my age, but then you know intel was having difficulty. So they bring in bane and company to kind of work on strategy or whatever and so two of the guys that I went to school with that, I knew well, were like literally working literally seven layers in the organization above me, and I'm like what? and so I just hit that, I tapped out, I extracted, I was like this is just some horse crap. I, this isn't the place for me. I need to go somewhere where I'm, you know, in a, in a smaller pod, where I can really touch and feel a thing. And so I just started throwing resumes out and wound up at Schnitzer Steel. Now really, yeah, and oh really. Yeah, and it was great. It was a time of transition for Schnitzer. I don't know if it was a great transition time for Schnitzer. They were transitioning from an older style scrap company to a more professional slash corporate company of the style that it is today. So they had parts of the parts of their business were both things and for sure I liked the old thing a lot and just tons of fun being in places like Boston and Portland scrapyard when they were building big mega shredders and new factories and driving the continuous improvement process there and trying to get metrics around things. It was really a good time. I enjoyed a lot of it. I came to Alter Trading in 2010 and that was wonderful right, I owe so much of my career everything I learned everything to the team at Alter, to Jay Rabinovitz and Rob and Michael Goldstein. I learned a lot there. I did a lot of really fun stuff for them that helped transform the company into the highly successful privately owned scrap company it is today. Dave: Like on the technology side, correct yeah. Roank: So I built a few factories, non-ferrous recovery plants to process not steel non-ferrous portions of the shredder and extract more metals out of stuff that would otherwise have gone to the landfill. And it was you know, exciting to do that, and it wasn't just building the factories but really growing out the entirety of the division that became, you know, a kind of center of excellence around that function, and it's an area that you know Alter remains very strong in today. Dave: Okay, well, I am excited to get into the next part of your story. So you're living in St Louis, working at Alter, being involved in some cool stuff and forward thinking technology. So how did from there? How do you end up starting a company in New Caney, texas? Roank: Yeah, so it's no reason not to be as open and honest about it as possible. So Alter was amazing. For the first six or seven years I was there, the job was like a nine and a half out of 10. I remember I was in New York going to make this time up sometime in 2013 or something like that. I've been there for three years and the Powerball was like some huge number, like a billion dollars, and so me and some buddies that were in finance, we all bought Powerball tickets and we talked about what we would do if we won the money, and I remember I determined to say I don't know if I would necessarily quit my job, right, like I really love what I do. I still think about that today. Dave: Did any of them have the same thought? Roank: No, they thought I was just completely crazy and they weren't necessarily wrong. I think I think perhaps again I loved it, but the point of it is I really enjoyed it. It was fulfilling, I had impact, things were changing. All of that when I struggled is as that phase of what Alter needed ended and I needed to move and assist alter with other things, primarily helping them grow a tier of management that had come from the art management level into being the next business leaders of the company. Just, you know, it's kind of standard transition planning type stuff and succession planning. I struggled with doing that successfully, a role that perhaps would have been viable or successful or satisfactory for me to do had it occur

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Join host David Spray, as he interviews business owners and industry leaders about the IC-DISC program. Insights and anecdotes to help you increase your after-tax income.

Creator

David Spray
Years Active

2019 - 2026
Episodes

72
Rating

Clean
Show Website

The IC-DISC Show

The IC-DISC Show

Ep073: From One-Room to 40,000 Pounds a Day

Ep072: Software as a Competitive Advantage with Gordon Driscoll

Ep071: IC-DISC from Start to Finish: The Complete Setup and Compliance Guide

Ep070: IC-DISC Myths, Mistakes, and Opportunities with Brian Schwam

Ep069: Subscription Pricing Success with Raffi Yousefian

Ep068: Beyond Banking Silos with Randy Gartz

Ep067: Highest and Best Use with Mike D'Onofrio

Ep066: From Silicon to Steel with Ronak Shah

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The IC-DISC Show

Episodes

Ep073: From One-Room to 40,000 Pounds a Day

Ep072: Software as a Competitive Advantage with Gordon Driscoll

Ep071: IC-DISC from Start to Finish: The Complete Setup and Compliance Guide

Ep070: IC-DISC Myths, Mistakes, and Opportunities with Brian Schwam

Ep069: Subscription Pricing Success with Raffi Yousefian

Ep068: Beyond Banking Silos with Randy Gartz

Ep067: Highest and Best Use with Mike D'Onofrio

Ep066: From Silicon to Steel with Ronak Shah

Ratings & Reviews

About

Information